The exempt status of engagement rings in Minnesota, when using the state exemptions, has not been clear for a while. Several years ago the legislature enacted a law that specifically said that "wedding rings" are exempt up to a certain dollar amount (about $2500). Unfortunately, some trustees have claimed that because the law says "wedding rings", that the law did not exempt engagement rings.
The on-line version of the law says that exempt assets include:
(c) The debtor's aggregate interest, not exceeding $1,225 in value, in
wedding rings or other religious or culturally recognized symbols of
marriage exchanged between the debtor and spouse at the time of the
marriage and in the debtor's possession.
This provision was enacted in 2005 -- Chapter 137. The original bill, HF 473, said:
1.15 (c) the debtor's aggregate interest in wedding rings, not
1.16 to exceed $1,225 in value, held primarily for the personal or
1.17 family use of the debtor or a dependent of the debtor.
The conference report to HF 473 said:
1.18 That the House concur in the Senate amendment and that H.F.
1.19 No. 473 be further amended as follows:
1.20 Page 1, line 17, delete "wedding" and after "symbols"
1.21 insert "of marriage exchanged between the debtor and spouse at
1.22 the time of the marriage and"
2.1 We request adoption of this report and repassage of the
2.2 bill.
I think someone was trying to be culturally sensitive and muddied the statute by dropping in the phrase "or other religious or culturally recognized symbols of marriage exchanged between the debtor and spouse at the time of the marriage" and not setting it off by commas or parentheses.
The real-world problem is that bankruptcy trustees (and possibly other creditors too) read the statute as follows:
(c) The debtor's aggregate interest, not exceeding $1,225 in value, in
wedding rings exchanged between the debtor and spouse at the time of
the marriage and in the debtor's possession.
In other words, they ignore the phrase "or other religious or culturally recognized symbols of marriage" and claim that the phrase exchanged between the debtor and spouse at the time of the marriage modified wedding rings, not "other symbols" (whatever other symbols means).
Their claim is that an engagement ring is not a wedding ring and also that it was not "exchanged between the debtor and spouse at the time of the marriage"
Recently Judge O'Brien had a case in which the trustee was making that argument. Fortunately, the judge did not agree and ruled that the debtor's engagement ring and wedding ring, as a set, were exempt.
There is an undercurrent in the case however. The trustee is claiming that the debtor tried to conceal the existence of the engagement ring and is trying to get the judge to rule that the debtor cannot exempt the ring -- even though it would otherwise be exempt -- because the debtor tried to "hide it".
So, that leads to one of the "unwritten rules" -- "If you want to keep it, you have to list it."
